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Reshoring
Following on from the Covid-19 impact in 2020, UK business has faced some unprecedented headwinds, and moving into 2021 the impact of Brexit has only exacerbated that negative impact.
Businesses have invested in the extra resource needed for Brexit, in terms of paperwork and extra time for transport movements, and have complied with all the relevant needs of customs where known. But some of the requirements were not known even right up to the end of 2020, where for example, the business was not responsible for the transport but still had to organise the export declaration to cover external couriers.
This initial disruption will reduce and indeed the streamlining of systems will mean that this paperwork impact going forward will be minimal. But this will still lead to a real push to reshoring product and manufacturing back to the UK. Not only because of the impact of Brexit, and a view from the UK public that supporting our own manufacturing is key, but the fact that any minimal disruption or delay in supply chain is still not wanted.
The Need
There will undoubtedly be a view from purchase teams that the total cost of a product will become even more important. This total cost will include production cost, delivery cost, and also the cost of poor quality from the product and supplier.
Escalating transport costs are having a major impact on the supply chain for the UK. Container costs from the far east and delays in shipping will drive costs up for the consumer. Uncertainty in shipping times from Europe means that extra drivers’ hours are having to be covered, and are driving up costs that will affect the consumer.
All of this means that the UK now has the real chance to convince the consumer that reshoring is indeed the way forward. By reshoring we can secure the supply chain, have ‘just in time’ production, have quality that meets the expectations of consumers and allow suppliers to all work together in a connected and valued supply chain.
The Support
But to achieve this, we need to see a campaign that is Government, and all Party backed. We need to promote and support UK manufacturing, and make sure that everyone is aware of the importance of UK manufacturing to the economic prosperity of our country. Every product should show the impact on our economy, in terms of UK jobs and materials from our country.
We need to teach the idea of national pride in our schools and colleges, and make sure that all youngsters see the value of manufacturing to our economy.
To make sure there are companies that are willing to invest in new technologies and processes that enable reshoring, the Government also need to invest in key areas to allow business to grow. We need to take back control of certain areas of the economy, whether that be the ability to make our own steel in the volumes required or produce enough power to allow electrification of vehicles to actually work. The infrastructure must be there to support the new businesses that will come along.
The future
Exciting times are ahead, with the February PMI figures showing improvement at 55.1, it shows that UK business is ready to push ahead and with support can be ready for the reshoring challenges.
So, in summary, I see that reshoring will become the topic of talk and news for 2021 and the coming years, but we must invest and support business now, to truly make this a reality rather than a want for the future.
